Your Credit Score and Your Business
The business world is highly competitive, and business owners can sometimes feel the fragility of their businesses in this environment. It is very important that you protect your business interests in terms of finances and reputation. One business mistakes and it can affect the growth and prosperity of your business.
With this in mind, one is led to think about how well your personal credit score is. The status of your personal credit score can greatly impact your business. Your business can be affected by your credit score in the following ways.
The truth is that personal credit score can potentially affect your business in many ways. Business loans can be affected by your credit score.
Personal credit scores are checked by banks and lender before they approve of a business loan applied for. It does not matter how well your business is doing, if anyone of the owners has a low credit score, it means that there is a great risk and financial burden to that individual which could affect their business operations. Many loans applications are not approved by financial institutions if there is an individual associated with the company that has a low personal credit score.
There are lending institutions, however, that don’t check on personal credit scores. Some lending institutions will still approve loan applications for businesses who are operating with sustained and consistent cash flow. A business’ history of revenue will be checked to enable them to determine if they will approve the loan application or not.
Personal credit score will not affect the granting of business finances by anonymous donors or venture capitalists. You will be granted the loan that you need by individuals or investors if they can see a functional business plan or if you business is steadily doing well.
There are people who are not aware of their credit scores. You can know your credit standing through free and premium services specifically designed to keep individuals updated on the current credit standing.
There are three major credit bureaus that do this service for business and individuals. Three three major credit bureaus are Experian, TransUnion and Equifax. Their calculations are quite different to each other and they even sometimes show radically different results. Before your loan application gets approved or not, lender evaluate all three credit ratings.
If you have a low credit score today, it is important to improve on it.
It is true that you personal credit score can impact your business and its success. Make sure you have a good credit score in order to have access to credit and loans when you need them. It takes time, effort, and money to rebuild your credit score but it is well worth it f you want to be around for long.